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Data Center Opportunity That You Don't Want to Miss
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Business spending is picking up at a faster rate than anyone could have anticipated. According to Kiplinger, business spending is now 8.7% above pre-pandemic levels, and you better believe the companies are using their capital to adapt to the increasingly digital economy. The world is moving towards a digital office space, and best-in-class data center REIT, Equinix (EQIX - Free Report) is paving the way.
I am pitching Equinix (EQIX - Free Report) because of its leadership positioning in data center real estate. This REIT is not only a play on the rapid economic expansion that is expected in 2021 but a play on the increasing necessity for enterprises to leverage digital technology to remain competitive.
According to Gartner, data center spending is expected to breach $200 billion in 2021, with the precipitous growth being driven by cloud computing, data analytics, 5G, autonomous driving, and AI advancement. Another super cycle of hyperscaling in data centers is expected to benefit chip makers in the coming months heavily, but it doesn’t appear that investors are pricing in the potential growth opportunity in EQIX.
Equinix is not only the largest data center REIT but has the highest-quality portfolio of network-dense assets. The enterprise has an excellent geographical and tenant mix that increases the value to all its customers with the benefits of scale and diversification.
The company has a highly reliable stream of revenue with over 94% of it topline coming from recurring sources. The business has proven consistent secular growth for over 2 decades and is expected to experience topline acceleration in 2021.
EQIX saw a knee-jerk sell-off by the markets last month following some lower-than-expected forward guidance. Now is the time to jump at this REIT of the future, with its P/E trading at its lowest level in nearly a year.
Some investors may be apprehensive about investing in a REIT in this rising interest rate environment as these high yielding investments typically look marginally less attractive when balancing the risk/reward. EQIX provides a very narrative than your typical REIT as it will not only grow with the economic recovery but has a long history of market outperformance (creating alpha) no matter the broader economic conditions.
The Charts
EQIX is currently trading around a robust support range ($640 - $655), which is being held by its pre-pandemic high and a Fibonacci retracement level from its recent highs.
This is a good spot to start a position in this enterprise that is poised for the 4th Industrial Revolution. I have a price target north of $800, with my Fib pointing to as high as $880. 17 out of 20 analysts are calling EQIX a strong buy today, with no sell ratings.
Revision: I misquoted Equinix’s ticker which is EQIX, not EQX which I accidently cited in the first part of my video
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Data Center Opportunity That You Don't Want to Miss
Business spending is picking up at a faster rate than anyone could have anticipated. According to Kiplinger, business spending is now 8.7% above pre-pandemic levels, and you better believe the companies are using their capital to adapt to the increasingly digital economy. The world is moving towards a digital office space, and best-in-class data center REIT, Equinix (EQIX - Free Report) is paving the way.
I am pitching Equinix (EQIX - Free Report) because of its leadership positioning in data center real estate. This REIT is not only a play on the rapid economic expansion that is expected in 2021 but a play on the increasing necessity for enterprises to leverage digital technology to remain competitive.
According to Gartner, data center spending is expected to breach $200 billion in 2021, with the precipitous growth being driven by cloud computing, data analytics, 5G, autonomous driving, and AI advancement. Another super cycle of hyperscaling in data centers is expected to benefit chip makers in the coming months heavily, but it doesn’t appear that investors are pricing in the potential growth opportunity in EQIX.
Equinix is not only the largest data center REIT but has the highest-quality portfolio of network-dense assets. The enterprise has an excellent geographical and tenant mix that increases the value to all its customers with the benefits of scale and diversification.
The company has a highly reliable stream of revenue with over 94% of it topline coming from recurring sources. The business has proven consistent secular growth for over 2 decades and is expected to experience topline acceleration in 2021.
EQIX saw a knee-jerk sell-off by the markets last month following some lower-than-expected forward guidance. Now is the time to jump at this REIT of the future, with its P/E trading at its lowest level in nearly a year.
Some investors may be apprehensive about investing in a REIT in this rising interest rate environment as these high yielding investments typically look marginally less attractive when balancing the risk/reward. EQIX provides a very narrative than your typical REIT as it will not only grow with the economic recovery but has a long history of market outperformance (creating alpha) no matter the broader economic conditions.
The Charts
EQIX is currently trading around a robust support range ($640 - $655), which is being held by its pre-pandemic high and a Fibonacci retracement level from its recent highs.
This is a good spot to start a position in this enterprise that is poised for the 4th Industrial Revolution. I have a price target north of $800, with my Fib pointing to as high as $880. 17 out of 20 analysts are calling EQIX a strong buy today, with no sell ratings.
Revision: I misquoted Equinix’s ticker which is EQIX, not EQX which I accidently cited in the first part of my video
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>